Transparency in Political Financing in Maldives

Transcription

1 CRINIS Research Project Transparency in Political Financing in Maldives CRINIS Research Project Transparency Maldives

2 Transparency in Political Financing in Maldives Transparency Maldives, MF Building, 7th floor, Chandhanee Magu, Malé, Republic of Maldives. Tel: Fax: Web: Design and Layout by Afzal Shaafiu This publication may be produced in whole or in part and in any form for education or non-profit uses, without special permission from the holder of the copyright, provided acknowledgement of the source is made. Transparency Maldives would appreciate receiving a copy of any publication, which uses this report as a source. No use of this publication may be made for resale or other commercial purposes without the prior permission of Transparency Maldives. Disclaimer: All material contained in this report is believed to be accurate as of May Every effort has been made to verify the information contained herein, including allegations. Nevertheless, Transparency Maldives does not accept responsibility for the consequences of the use of this information for other purposes or other contexts. 2

3 CRINIS Research Project Acknowledgements This research is a product of the combined efforts of numerous individuals and would not have been possible otherwise. First of all, Transparency Maldives would like to thank all the participants of this research for their contribution and commitment. Specifically, we would like to acknowledge the contribution of the Elections Commission, all political parties involved, citizens, media organizations and political financing donors and experts, for taking the time to answer the questionnaires and our many inquiries. The research report would also not have been complete without those who validated and verified the data and all of its findings and conclusions. Transparency Maldives would kindly like to acknowledge Athaullah Rasheed and Ali Shujau for their legal review and extensive feedback on the report. We would also like to express our gratitude to all of the participants of the data validation workshop and members of Transparency Maldives Anti-Corruption Network for their constructive comments that helped to improve the data analysis and therefore the quality of this report. We thank Tinatin Tinua, at Transparency International Secretariat, for her immense guidance at every stage of this research project, from the very beginning till the publication of this report. Transparency Maldives would also like to kindly acknowledge the support of the British Government s Foreign and Commonwealth Office for funding this research project. Thank you all. Transparency Maldives Male, Maldives

4 Transparency in Political Financing in Maldives Foreword Money is a necessary element for a functioning democratic system. Political parties and candidates need resources for building solid organizations and canvassing public support. Yet money in politics, without proper regulation and practices, can seriously undermine a democracy. Electoral processes can be unduly influenced when sizeable and undisclosed amounts of money are provided to political parties and candidates by organizations with their own political agendas. Political parties and candidates may distort the electoral process by resorting to buying votes rather than focusing on the quality of their campaign messages. The quality of governance is seriously compromised when decisions made by elected politicians benefit those who funded their ascent to power and not the broader public interest. Regulation of political financing, both during electoral and non-electoral periods, therefore is essential to a healthy democracy. The single most important step towards regulating political finance and eliminating undue influence posed by money is proper disclosure of lawful financial reports. Without disclosure there is no way of determining how much money is circulating in the political system, where it comes from or to whom it is given. The ceiling on donations and spending cannot be enforced, nor can we prevent illicit money from finding its way into campaign coffers, without proper reporting and disclosure. Moreover, lack of transparent and accountable political financing mechanisms give rise to public suspicion that donors are buying favors from politicians, and undermines public confidence in clean and legitimate elections and political representation. This research project was carried in the hope of analyzing political financing transparency in the Maldives and establishing a baseline that would indicate areas that need reform, both in the legal framework and practices. It is our hope that this study will also initiate dialogue and commentary on this critical issue of political financing and the dynamics between political financing, vested interests, and corruption will be widely discussed and examined in various public forums. We also hope that all stakeholders would find the conclusions and recommendations provided in this report to be beneficial. It is our aim to use this research to advocate for reforms in political financing practices and laws that would enable greater transparency and accountability. 4 Ilham Mohamed Executive Director

5 CRINIS Research Project Table of Contents Acknowledgements 3 Foreword 4 Acronyms 6 Executive Summary 7 Introduction and Background to the Study 9 General Context on Political Financing 11 Methodology 15 Research Results: Overall Findings 21 Research Results: Analysis of the Ten Dimensions 23 Dimension 1: Internal book-keeping 24 Dimension 2: Reporting to the Elections Commission 27 Dimension 3: Scope of Reporting 29 Dimension 4: Depth of Reporting 33 Dimension 5: Reliability of Reporting 36 Dimension 6: Public Disclosure 37 Dimension 7: Preventive measures 41 Dimension 8: Sanctions 45 Dimension 9: State Oversight 48 Dimension 10: Non-state over sight 51 Conclusions and Recommendations 52 5

6 Transparency in Political Financing in Maldives Acronyms CSOs EC MP NGOs TI TM Civil Society Organizations Elections Commission Member of the Parliament Non Governmental Organizations Transparency International Transparency Maldives 6

7 CRINIS Research Project Executive Summary The Crinis research uses both quantitative and qualitative research methods to assess various dimensions of political financing transparency and accountability, and is to be used as a benchmarking and advocacy tool for reforming the legal framework and practices associated with political financing. Specifically, ten, interdependent dimensions-such as the scope, disclosure, and depth of financial reporting-were assessed in this research as indicators of transparent political financing procedures. This research shows that, overall, the legal framework scored higher than that of practices. Specifically, as far as the legal framework is concerned, none of the dimensions on political financing fell within the Insufficient range and all of the dimensions received a score that fell within the Average range for law. In evaluating practice however, many of the dimensions of political financing, scored within the Insufficient range. Overall scores for both of these aspects of law and practice fell within the evaluation category of Average, indicating that there is much room for improvement of both the legal framework on political financing and political financing practices. One of the key recommendations of this report is for the Elections Commission to provide a standardized financial reporting template for all mandatory financial reports, which have to be submitted to the Commission by political parties and electoral candidates, to improve the scope and depth of information submitted. Another key recommendation is for the Elections Commission, to proactively make available, all mandatory financial reports, that are submitted to the Commission by parties and candidates, to the public in an easily accessible manner, on a timely basis, so that voters can make informed decisions when casting their ballots. The report also provides recommendations for improving the current legal framework on political financing. These include amending laws to mandate parties and candidates to submit official identification of donors and vendors and to mandate political parties to disclose annual audited accounting reports to the general public. It is also recommended that Non-State actors such as Civil Society Organizations partake in monitoring and overseeing political financing practices and to conduct awareness and advocacy programs on transparency and accountability in political financing. 7

8 8 Transparency in Political Financing in Maldives

9 CRINIS Research Project Introduction and Background to the Study Maldives is a unique country geographically, with its population of approximately 350,000 people spread among some 1200 coral reef-based islands, of which about 200 are inhabited. These islands form an archipelago that stretches 820 Kms from north to south, and 120 Kms from east to west. This geographical eccentricity has to some extent dictated the economic structure of the Maldives which is heavily dependent on tourism and fishing and it also, poses special challenges in terms of governance. In recent years, the political sphere of Maldives has undergone significant changes with the decision to allow political parties by the People s Majlis (parliament). Following this decision, political parties started operating in June 2005 and since then have played an integral role in the political scene of Maldives. Moreover, the introduction of a new constitution in August 2008, led to the first-ever multi-party presidential election, held in October 2008, which was followed by a parliamentary election in May 2009; both elections were held under a very politically competitive environment. However, it is often speculated that political parties do not function very transparently, in both electoral and non-electoral periods, and that their operation involves potential forms of corruption. This is not the case only in the Maldives. According to the Global Corruption Barometer , published by Transparency International (TI), across the globe, the organization or institution believed to be the most corrupt are political parties. About 80 percent of participants in the study believed that political parties are corrupt or extremely corrupt, compared to other sectors or institutions such as Non-Governmental Organizations (NGOs), the Military and Media. Furthermore, the report also highlights that over the years (between 2004 and 2010), around the globe, there has been an increase in the number of people who perceive that political parties are the most corrupt institution in states. A key reason for this perception is the general lack of transparency in political financing by political parties and electoral candidates during both electoral and non-electoral periods. Given that political parties receive both direct and indirect public subsidies and electoral candidates rely on the citizenry for support, it is vital that the public is aware of how and more importantly from where political parties and candidates receive their income, and how it is utilized. Transparency 1 Transparency International, Global Corruption Barometer For details please visit: 9

10 Transparency in Political Financing in Maldives in political financing will allow people to make informed choices when becoming a member of a political party or when voting for an electoral candidate. It will also ensure that elected officials and parties are accountable for their finances and aid in monitoring their integrity. In 2006 and 2007, TI successfully piloted the Crinis project, a research, benchmarking, and advocacy tool, in eight Latin American countries. Crinis is a Latin word meaning ray of light. The project assessed levels of transparency and accountability in political party and election finances looking at laws and practices in the participating countries. Following its success on the diagnostic work on political finance in Latin America, the Crinis Pilot Project in Asia Pacific was launched to explore the possibility of replicating the same in the region. The Asia Pacific Project was first implemented in Bangladesh, Indonesia and Nepal. In the Maldives, although, much public discourse goes on about politics and political parties, there is hardly any discussion around the specific topic of political financing. This maybe due to the fact that multi-party political system is a relatively new phenomenon in the Maldives. and the discourse around the topic has not had enough time to reach the level of maturity needed to address specific governance issues, such as political financing. The first political parties, in the recent past, were formed in 2005 and the first ever multi-party election took place only in 2008, as mentioned earlier. The legal framework on political parties and elections was also established around the same time, with most of the legislation passed hastily just prior to the presidential elections of Similarly, an independent Elections Commission (EC), the main state institution that oversees political parties and elections, was established only in Given the infancy of the governance structure, there are various shortcomings in both the legislative framework and practices associated with political financing. The findings of this study will be used for the purpose of advocating for the reform of the legislative framework and practices to facilitate and enforce sound and transparent procedures of political financing. Transparency Maldives (TM) hopes to work in collaboration with the People s Majlis and the Elections Commission in order to make sufficient amendments to the current legislative framework on political party financing in the Maldives to improve the Political Parties Bill of the Maldives, which is currently at the committee stage in the Majlis. TM also hopes to do advocacy work for political parties and the EC on ways of fostering more transparency in their functions, specifically with regards to political financing practices. 10

11 CRINIS Research Project General Context on Political Financing The newly adopted constitution of the Maldives ensures separation of state powers and the electing of the legislature and president through popular vote. As mentioned earlier, the legal framework on elections, political parties and political financing in general, was initiated very recently in 2008, just ahead of the first multi-party presidential elections in the country. The following set of key laws and regulations govern the political financing of parties both during electoral and non-electoral times, and that of electoral candidates. 1. Regulation on Political Parties 2005 (enacted under the General Regulations Act (Law No: 6/2008) 2. Elections Commission Act (Law No: 8/2008) 3. Regulation of the Elections Commission 2010 (enacted under the Elections Commission Act 2008) 4. Elections (General) Act (Law No: 11/2008) 5. Presidential Elections Act (Law No: 12/2008) 6. Regulation on Presidential Elections 2008 (enacted under the Presidential Elections Act 2008) 7. Parliamentary Elections Act (Law No: 2/2009) 8. Regulation of the People s Majlis 2006 (enacted under Article 63 of the Constitution). These laws and regulations cover various dimensions of political financing and some of the key aspects of this legal framework include: Documentation of income and expenses 1. Every political party is required to appoint a treasurer to maintain its books of account of all income and expenditure. 2 All political parties are required to prepare and maintain detailed income and expenditure, including details of income and assets, how and from where they were obtained, and details of all expenditure. 3 The Elections Commission is empowered to check reports of income and expenditure of parties at any time. 4 2 Regulation on Political Parties 2005, Section Regulation on Political Parties 2005, Section 28(a), (b). 4 Regulation on Political Parties 2005, Section 28(c). 11

12 Transparency in Political Financing in Maldives Candidates competing in elections are required to appoint an official election agent, who is required to maintain books of account of all income and expenditure of that candidate. 5 Limits on Income & Expenses 1. Political Parties are permitted to procure finance for their activities through subsidies by Government, and from private actors. 6 Under the Regulation on Political Parties 2005, a total of % of the state budget for each year should be allocated to registered political parties. 7 The Elections Commission is mandated to distribute 40% of this amount equally among all political parties registered at the time of distribution, and 60% to be distributed pro rata according to the size of membership of the parties. 8 Apart from this limit on public subsidy, there is no legal limitation prescribed for financing by political parties. 2. Political parties are free to obtain income from private parties, including through membership fees, monies and assets from donations, money received from fund raising activities, money received through commercialization of party assets, and by loan financing The Regulation on Political Parties 2005 and the Elections (General) Act 2008 prohibits procurement of monies or assets through certain sources. These include income from foreign citizens, governments, organizations and associations, international organizations, anonymous sources, state institutions or companies with state share holding, and cooperative societies. 10 Moreover, this Regulation prohibits any use of force or intimidation, or the use of undue influence including special privileges or immunities to certain persons, in the procurement of finance The Elections (General) Act (Law No: 11/2008), which govern the general rules and procedures of all elections, imposes a campaign spending limit of Maldivian Rufiyaa (MVR) 12 5 Elections (General) Act 2008, Section Regulation on Political Parties 2005, Section Regulation on Political Parties 2005, Section Regulation on Political Parties 2005, Section Regulation on Political Parties 2005, Section Regulation on Political Parties 2005, Section 25; Elections (General) Act 2008, Section Regulation on Political Parties 2005, Section 26.

13 CRINIS Research Project 1500 per every eligible voter from the constituency of the candidate. 12 Candidates may receive both monetary and in-kind assistance as loans, as far as they do not come from any of the prohibited sources. The contributions given by an individual to a candidate for election expenses should not exceed by more than 0.5% of the campaign spending limit 13 and the contributions given by a legal entity to the candidate for election expenses should not exceed by more than 2% of the campaign spending limit 14. Reporting to State Body 5. Political Parties are required to submit to the Elections Commission within 90 days at the end of each year, an audit report detailing all income and assets received, with details of how and from where they were obtained, and details of all expenditure and purposes of all such expenditure All candidates standing elections are required to submit to the Elections Commission, within 30 days of the election, a financial report, detailing all expenditure and income, along with bank statements, receipts, invoices, and bills. 16 Public Disclosure 1. The right to information is established in the Constitution. 17 A Regulation on the Right to Information from State Institutions, enacted under the General Regulations Act governs the rules and procedure on application and obtaining of official information kept by State institutions made available to the public. 12 Elections (General) Act 2008, Section Ibid 14 Elections (General) Act 2008, Section Regulation on Political Parties 2005, Section Elections (General) Act 2008, Section 73. The Presidential Elections Act 2008, however, prescribed a time limit of 60 days from the election, for the submission of audit report under this Act (Section 16). 17 Constitution of the Republic of Maldives, Article

14 Transparency in Political Financing in Maldives 2. The Elections (General) Act provides for the Elections Commission to ensure candidates financial reports to be made available to the public. 18 Similarly, the Presidential Elections Act 2008 stipulates that the Elections Commission should ensure financial reports submitted by presidential candidates to be made available for public scrutiny There are no legal provisions that require publishing of annual financial reports of political parties, but parties are required to disclose the information to the Elections Commission and members of the respective political party have the right to all information with regards to party income and expenditure. 20 Sanctions for offences 1. The legal regime on the political financing provides for sanctions for both failure of submission of financial reports, as well as for breach on the prohibited sources of financing. The Regulation on Political Parties 2005 provides fines ranging from MVR 20,000 to MVR 50,000 where a party fails to submit its financial records in due time Where a party is found to be in breach of procuring finance through prohibited sources, the Regulation on Political Parties 2005 provides for fines amounting to twice the value of monies or assets procured. 22 The Elections (General) Act provides for fines ranging from MVR 6,000 to MVR 24,000 and imprisonment for up to 2 years where a candidate is found to be in breach of the provisions of the Act, including failure to submit financial reports and breach on limits of procurement of finance as well as limits on campaign spending Elections (General) Act 2008, Section 73(d). 19 Presidential Elections Act 2008, Section Regulation on Political Parties 2005, Sections 29, Regulation on Political Parties 2005, Section 31(b). 22 Regulation on Political Parties 2005, Section 31(a). 23 Elections (General) Act 2008, Section 75.

15 CRINIS Research Project Methodology Data Sources This study utilized both primary and secondary sources for collecting data. For an assessment of the legislative framework, official copies of relevant laws and regulations were used, and to analyze the practices regarding political financing, various stakeholders were selected to participate in the research. This included, ten political parties, selected based on the size of their membership (Appendix A), and their accountants/treasurers. Fifteen Members of the Parliament, representative of all five political parties and independent members, were also surveyed for the research (Appendix B). Financial reports of all of the six presidential candidates (Appendix C) who ran for the 2008 elections were also evaluated. The Elections Commission, as the major overseeing body, provided access to some of the primary sources such as candidate and party accounting reports. Various donors (Appendix D), media companies and experts were also contacted for information. Moreover, 14 people were contacted, including students and a journalist, to participate in the citizen experiment, which assessed the degree of access to information related to political financing by average citizens. Data Collection Methods Stakeholders, including the Elections Commission, party accountants, donors and electoral candidates who ran for parliamentary elections were personally interviewed and given survey questionnaires. Media companies, donors and parties were primarily contacted through letters, requesting for information such as accounting reports and details of airtime given or sold to parties and electoral candidates. In the citizen experiment, mentioned above, participants were given a list of specific information related to political financing which they were required to obtain from stakeholders using different mediums of communication including letters, s and telephone. The collected data was then uploaded to web-based questionnaires (generated by Transparency International), by the research team or in some cases by the participants themselves. Table 1 summarizes the type of information collected, the source of information and the data collection method. 15

16 Transparency in Political Financing in Maldives Table 1: Type and Sources of Information Type of Information Sources of Information Data Collection Method Legal Framework Relevant laws and regulations Law review Practice by parties on financial issues Disclosure of Information Electoral campaign expenditures of parties and candidates Practice on political finance Party reports, official records and public information Testing availability of information from various stakeholders Party and candidate reports provided by EC Parties, donors, MPs, EC, CSOs, experts Team analysis, complemented with interviews of party accountants and experts Written requests for information Accounting report reviews Survey interviews Data Analysis: Dimensions used to assess the Level of Transparency & Accountability of Political Finance. The Crinis Project recognizes three different types of political financing: 1. Non-electoral party finances whereby resources are mobilized to support the party structure and its activities in non-election periods; 2. Party finances during election campaigns whereby resources are mobilized to communicate with voters and to conduct other campaign related activities; and 3. Candidate finances (separately from their parties) in election periods, taking into account that individual candidates often raise and manage substantial sums of campaign resources. Crinis involves scrutinizing the regulatory framework, comparing it to internationally recognized standards, and comparing the regulatory framework against what happens in practice to identify gaps between law and practice. The collected data, once fed into the Crinis tool, provides empirical values, which coupled with the in-depth analysis of the legal framework will identify specific areas that need reform. The level of transparency of political finance activity has been quantified taking into consideration 16

17 CRINIS Research Project the following ten dimensions (Table 2). Table 2: Ten Dimensions of Transparency in Political Finance Dimensions Internal book-keeping of parties Reporting to control agency (Elections Commission) Comprehensiveness or scope of reporting Depth of reporting Reliability of Reporting Disclosure to the public Preventive measures Sample Questions for Building Indicators Is book-keeping mandatory by law? How professional is staff in practice? By law, do parties, candidates, service providers and media render accounts on their role in political finance? When and in what format? Do reports include public and private sources? Do they cover income and expenses? Do they comprehend monetary contributions, in kind contributions, rebates etc? By law, do reports include information on individual donations? Do they clearly identify the donor of each donation? Do different actors disclose all resources in reports? How accurate are reports, to the knowledge of experts? Is it mandatory for state agencies/parties/candidates to disclose information on political finance? In practice, how accessible is such information to experts, journalists and ordinary citizen? Are donations channeled exclusively through official bank accounts? Are there any loopholes for anonymous donations? Sanctions What are the existing sanctions-civil, criminal and political according to the law? In practice, are the existing laws strictly enforced? State oversight (Elections Commission) Non-State Oversight Do experts evaluate institutions of state oversight as independent? Are they evaluated as efficient? From the perspective of selfevaluations, do they lack human resources? Do they lack training? Do Civil Society Organizations monitoring political finance exist? In which areas of political finance do they develop activities? Do experts evaluate organizations of public oversight as independent? 17

18 Transparency in Political Financing in Maldives Crinis tool allows quantifying the transparency of political finance activity by using ten dimensions. Internal bookkeeping (dimension 1) ties in to the way in which political parties internally manage their financial resources. Reporting to the electoral management body (dimension 2) evaluates the extent to which parties or candidates report to a government oversight body. Disclosure of information to the citizens (dimension 6) takes a look at the public s access to political finance information. Three dimensions comprehensiveness of reporting (dimension 3), depth of reporting (dimension 4) and reliability of reporting (dimension 5) center around the nature of data furnished in the financial reports and help to determine the quality of the data submitted to the electoral bodies. These evaluate crucial areas like all relevant finance activity, including cash, in-kind and other transactions, identity of the donor, credibility of submitted data and the perception of credibility of reports by key actors. A third group of dimensions encompassing prevention (dimension 7), sanctions (dimension 8) and state oversight (dimension 9) addresses monitoring compliance with established rules and regulations. This includes preventive measures to facilitate effective oversight, the existence of sanctions that can be imposed and the institutions and actors in charge of performing oversight functions. Finally civil society oversight (dimension 10) addresses monitoring and oversight role of the civil society irrespective of the formal state control body with regard to political financing issues. The Crinis questionnaire consists of roughly 440 questions, some of them with several possible answers and others with only one possible answer. These questions are grouped together into roughly 50 different indicators, which are then summarized to the 10 dimensions mentioned above. The scale for each dimension ranges from 0 to 10, where 10 indicates that a country has met all criteria expected in terms of transparency and accountability and 0 indicates that non of these criteria has been met. Scores between 0 and 10 are grouped into three evaluation categories: insufficient (0 to 3.3), average (3.4 to 6.7) and good (6.8 to 10). Please see Appendix E to see the explanatory note on calculating the final Crinis scores for further information on data analysis. Limitations of the Study There are several limitations to this study, including challenges that the research team faced. First is the non-existence of any previous studies, assessments, or research findings in the area of political financing. This meant that the research team did not have any secondary data to rely 18

19 CRINIS Research Project on, and adding to this is the lack of media reports on this topic. Very little has been reported in the mainstream media on issues of political financing. Second is the lack of independent expertise in the area of political financing in Maldives. At the time of writing this report, there are no civil society organizations, academics, journalists or concerned citizens carrying out the watchdog function specifically in political financing. The only expertise in this area is associated with the current political financing system, either as political party affiliates or as part of the Elections Commission. There are no independent third party experts in the field. This is also evidenced in the low score of the dimension of non-state oversight, the lowest among all dimensions. This lack of expertise would have been reflected in some of the scores given by some interviewees. It is important for this reason that one relies not only on the scores but also the narrative analysis following each dimension. The scores are indicative assessments and should not be taken as indisputable judgments. The narratives provide a more concrete evidence-based analysis. Third is the difficulty in obtaining information from different stakeholders, especially the private sector, general citizens, television stations, and legislators. This could perhaps be explained by the fact that research, in general, is rather a novel activity in the Maldives-especially in areas of governance-and many people do not understand the purpose or value of research. As a result such attempts are usually viewed with an eye of suspicion. Adding to this is the general mistrust towards NGOs, especially NGOs working in the area of governance. Lastly, the infancy of the multi-party political system in the Maldives, and more specifically the infancy of the electoral system, also lead to limitations and challenges in carrying out this research. Political parties, in the recent history, gained formal recognition only in During the period under review, there have only been two multi-party elections, a third election was conducted whilst the research was still ongoing. As a result, a lot of the legal provisions have not been put to test under the court system. Hence, there was a lack of legal directives, court orders or legal precedents related to political financing, resulting in a lack of material for reference. Despite all this it is imperative to have conducted this study, at this point in time, to capture the landscape of political financing system, as it is now. This study hopes to be the starting point for any future studies on the political financing system of the Maldives and would hopefully act as an accurate baseline to which the situation can be compared to, in the future. 19

20 Transparency in Political Financing in Maldives Scope The research for this report was carried out during a six-month period that lasted from November 2010 till April 2011; therefore all the information included in this report is accurate as of that time. For example, given the volatile political atmosphere and the prevalence of parliamentarians changing their political party affiliations, it is possible that some of the MPs who were surveyed for the research do not currently belong to the same parties as they did during the research period. This research, as mentioned above, only analyzed the financial reporting of ten political parties and they were chosen based on party membership. One of the selected parties was only registered in January 2010 and therefore only data from nine parties were used. For the purpose of this study, the year 2008 was chosen as both the non-electoral year for political party financing and for presidential election finances. The reason why the same year was chosen to assess both non-electoral finances and finances during electoral periods was because, legally, political parties do not have to report on electoral campaigning finances exclusively and only electoral candidates are required to submit accounting reports after elections. This means, as far as political parties finances are concerned, year 2008 can be considered a non-electoral year. For the parliamentary election finances, the research was limited to the year

21 CRINIS Research Project Research Results: Overall Findings In comparing the ten dimensions of transparency of political financing in Maldives (table 3), this study found that Non-State Oversight (dimension 10) received the worst score (1.2), meaning that public oversight is minimal and insufficient when it comes to issues of political financing. The other dimension that falls within the Insufficient range is the dimension on Sanctions, which scored 2.5. Partly, this can be attributed to legal ambiguities with regards to sanctions for non-compliance on political financing activities, on top of lack of enforcement of regulations in general. Of the ten dimensions, scores on State Oversight, Prevention, Disclosure, Reliability, Depth, Scope & Reporting, were on the average category ( ). This explains the reason for the total score of 4.6, for the overall Crinis index for the country. The only dimension that scored in the good category (6.8-10), aggregated of both law and practice, is that on Bookkeeping (6.8). 10 CRINIS INDEX: AGGREGATE AVERAGE Total 4.6 Book keeping 6.8 Reporting 3.9 Scope 6.4 Depth 5.1 reliability Disclosure Prevention Sanctions 2.5 State Oversight 6.1 Non-State Oversight 1.2 Table 3: Crinis Index: Aggregated Averages Comparison of the legal framework and practices on political financing in the Maldives (see table 4, below) shows that overall the legal framework scored more (5.1), than that of practices (4.1). As far as the legislative framework is concerned, none of the ten dimensions on political financing fell within the Insufficient range and all of the dimensions received a score that fell within the Average 21

22 Transparency in Political Financing in Maldives range for law. 24 In evaluating practice, many of the dimensions of political financing, such as Reporting, Disclosure, Prevention, Sanctions and Non-State Oversight scored within the Insufficient range, whereas some dimensions such as Book-Keeping and Scope scored quite high and fell within the Good range. However, overall scores for both of these aspects of law and practice fell within the evaluation category of Average, indicating that there is much room for improvement of both the legal framework on political financing and political financing practices. CRINIS INDEX: LAW vs PRACTICE 10 LAW PRACTICE SCORE Total Book keeping 6.1 Reporting Scope 4.4 Depth reliability 3.6 Disclosure Prevention Sanctions State Oversight Non-State Oversight 1.2 Table 4: Crinis Index: Law vs. Practice Please note there is no law score for the dimension on Reliability since this is a perception based dimension and also none on Non-State Oversight, since there is no legal framework on non-state oversight of political financing in the Maldives.

23 CRINIS Research Project Research Results: Analysis of the Ten Dimensions Levels of Transparency The ten dimensions of transparency in political financing that are measured in this study are interdependent. For example, the public s access to financial reports (dimension 6) depends on whether political actors submit reports to a state oversight agency (dimension 2). Such disclosure, in turn, is nearly impossible to obtain if parties lack an internal book-keeping system (dimension 1). As such, transparent political financing is not guaranteed even if the proper operation of one or two of these dimensions is confirmed in practice. On the contrary, all dimensions must score well on the whole. 23

24 Transparency in Political Financing in Maldives 1 Dimension 1: Internal book-keeping The first stage of reporting by parties or candidates in both non-electoral periods and during campaign or election periods is internal book keeping. Legal obligations in the area of bookkeeping and the political culture of the parties are factors that can influence this task. For parties to comply with legal regulations and uphold their own values and principles, it is essential for them to have a functioning administration with the necessary expertise. In this study, the internal book keeping of parties was measured with five indicators. These include whether parties keep books on income and expenses, whether they disclose this information to party members, the standard of book-keeping followed, who signs the books and reports, and lastly whether financial records are kept for a prescribed length of time. 10 INTERNAL BOOK-KEEPING Total Law Practice Party Presidential Legislative Table 5: Scores for Dimension 1, Internal Book-Keeping The Regulation on Political Parties 2005, which governs the conduct of political parties, requires all political parties to maintain books of account on all income and expenses. 25 The Regulation also requires parties to appoint a specific person to carry out this function. 26 The research team was able to verify that nine out of the ten parties selected for the research kept records of their finances, of the year As parties are required to submit annual financial reports to the 25 Regulation on Political Parties Section 28 (a): Every party shall maintain books of account on all income received and all expenditure incurred. 26 Regulation on Political Parties Section 27: Every party shall appoint a person responsible for the party s finances and the person shall be responsible for the following: 1. Maintaining books of account for all income and assets received; and 2. Maintaining books of account for all expenses incurred The remaining party, Dhivehi Qaumee Party (DQP) was registered in January, 2009.

25 CRINIS Research Project Elections Commission, parties would, in practice, have to update their books at least annually. It is assumed, for parties to be able to submit an accurate report, that they would update their books on a more frequent basis. One of the parties, selected for the research indicated that they update their books on a quarterly basis, another on a monthly basis and another on a bimonthly basis. Legally, party members have the right to access financial records and information from their respective parties. 28 The law does not require party accounting reports to be signed by a certified accountant or an external auditor. However most parties have their accounts audited by an external auditor. Of the nine parties that were functioning in the year 2008, eight parties had their accounts audited by an external audit firm and these reports were submitted to the Elections Commission. The law does not require party accounting reports to be signed by a senior member of the party, let alone a member of the party. However, in practice, most parties had their accounting reports signed by a senior member of the party, when they were submitted to the EC. There are no legal provisions prescribing the length of time for which records should be kept. Most parties have indicated that they save and keep a copy of their accounting reports. The research team is unable to verify the validity of this claim as only two parties disclosed a copy of their audited reports, for the year 2008, to the research team. The Elections Commission maintains copies of the audit reports submitted by parties, on file. The Elections (General) Act (Law No: 11/2008) requires all electoral candidates to maintain books of account of their campaign income and expenses. 29 The Act also requires the candidates and their official electoral agents to sign a declaration confirming the validity of the accounting 28 Regulation on Political Parties Section 30: All party members have the right to know income and expenditure (information) of their parties. 29 Elections (General) Act 2008 Section 73 (a): All candidates, within 30 days of the Election Day, shall submit to the Elections Commission a financial report which includes the following information. 1. Expenses incurred by the Candidate in relation to the election. 2. Details, separately, of the expenses incurred during the electoral campaign. 3. Details of the manner in which contributions were procured for election expenses. 25

26 Transparency in Political Financing in Maldives reports. 30 No legal provision exists that require candidates to have their accounts audited by an external auditor, and in practice, only one out of the six presidential candidates had their accounts audited by an external auditor. All of the fifteen legislative candidates reports scrutinized for the purpose of the research had their reports signed by the candidate. The Act also does not require candidates to keep a copy of their accounting reports on file. The research team requested four legislative candidates, who ran for the Parliamentary Election of 2009, to share a copy of their campaign accounting reports, however none of the candidates shared their reports with the team. Two candidates indicated that they did not have the reports with them and that they needed to get a copy from the Elections Commission. As with parties, the Elections Commission keeps accounting reports of electoral candidates on file. Electoral candidates are not required to disclose their financial reports to the public; the onus of making this information available to the public lies with the Elections Commission. 31 The fact that most political parties reviewed under this research, without any legal obligation, externally audited their financial reports and a senior member of the party signed the accounting reports explain why the score for practice is higher than the score on law (see table 5, above). 30 Elections (General) Act 2008 Section 73 (c): As proof that the information and materials submitted pursuant to subsection (b) are a true account of the transactions, receipts, invoices, bills and other such documents pertaining to transactions shall be submit ted along with the information submitted pursuant to subsection (b) Elections (General) Act 2008 Section 73 (d): The Elections Commission should make arrangements for the public to be able to inspect the information and materials furnished pursuant to subsection (a).

27 CRINIS Research Project Dimension 2: Reporting to the Elections Commission For this dimension, the study focused on five indicators that covered both the legal framework and reporting practices of political parties and electoral candidates to the Elections Commission. These indicators included questions regarding whether parties and candidates must render accounts to a state agency, whether donors, vendors and media companies are required to report, whether there is a specific format for disclosing information and how often reporting is required REPORTING TO THE EC Total 3.9 Law 4.5 Practice 3.3 Party Presidential Legislative 4.3 Table 6: Scores for Dimension 2, Reporting to the Elections Commission By law, political parties are required to render their financial accounting reports to the Elections Commission on an annual basis. 32 Parties are not required to submit their financial reports to any other state or government agency. Though the law does not mandate parties to report accounts in a standardized format, parties are required to include in their reports the details of funds and assets received, the sources of these funds and assets, how these funds and assets were procured, the amount of money spent, how it was spent and the purpose for which it was spent. In practice, parties do not specify separate sources and amounts of funding. In most cases, the absence of the standardized reporting format also leads to inconsistencies on the information provided by parties. 32 Regulation on Political Parties 2005 Section 29: Within 90 days of the end of the Gregorian Calendar the party must submit an audited report, including the details of funds and assets received, the source of these funds and assets, how these funds and assets were received, the amount of money spent, how it was spent and the purpose for which it was spent. 27

28 Transparency in Political Financing in Maldives The Elections (General) Act requires electoral candidates to file an accounting report with the Elections Commission within 30 days of the election. 33 The law requires presidential candidates to report to the Elections Commission within 60 days of the Election. 34 However, the law is vague on the information required for submission and leaves much for interpretation. In practice, presidential candidates used different formats to submit the reports; however, for the Parliamentary Election of 2009, Elections Commission provided a standardized format for all legislative candidates to submit their financial reports. There is no legal provision that mandates vendors, donors and media companies to report to the Elections Commission. 33 Elections (General) Act 2008 Section 73 (a): A report relating to the financial matters of the election of the candidate, including the matters specified below, should be prepared and submitted to the Elections Commission within thirty (30) days from the date of the election The Presidential Elections Act 2008 Section 16: All the financial transactions carried out by the candidate in relation to the election shall be audited by the official elections auditor of the candidate and the audit report shall be submitted through the official elections agent of the candidate to the Elections Commission within not more than sixty (60) days after the date of the election. The Elections Commission shall make arrangements to maintain a system to make available for public inspection the Audit reports submitted in this manner.

29 CRINIS Research Project Dimension 3: Scope of Reporting 3 Scope of reporting, the third dimension, looks into two main indicators: what types of funding sources are included in the reports (e.g., donations and public subsidies) and what expenses are included in the reports (e.g., expenses from private donations and expenses from public subsidies) SCOPE OF REPORTING Total Law Practice Party Presidential Legislative Table 7: Scores for Dimension 3, Scope of Reporting By law, political parties can obtain funding from membership fees, donations, fund raising activities, and commercialization of party assets and from loans. 35 Furthermore, parties are entitled to receive public subsidies; % of the state budget is allocated for political parties. 36 The law does not allow parties to accept funds from foreign citizens, foreign governments and agencies, international organizations, state institutions, companies with state shares and from anonymous sources Regulations on Political Parties 2005 Section 24: Private parties shall give money and assets to political parties in the following manner and for the following purposes. 1. Fee that has to be paid for becoming a member of a party. 2. Money and assets donated to the party, as gifts, from party supporters. 3. Money from profit earning activities conducted by the party. 4. Money earned from the commercial use of party resources. 5. Loans. 36 Regulations on Political Parties 2005 Section 22: The money given to Political Parties shall be allotted for in the annual national budget and the allotted amount shall be in between 0.1% - 0.2% of the total budget. 37 Regulation on Political Parties 2005 Section 25: This regulation does not allow parties to accept money and assets from the following sources. 1. Money and assets from foreigners, foreign governments, foreign organizations, foreign institutions and aid from foreign sources. 2. Money and assets given as aid from foreign organizations. 3. Money and assets from sources who want to remain anonymous. 4. Money and assets from Government businesses. 29